Noland v. Farmers Ins. Co., Inc.
| Decision Date | 13 February 1995 |
| Docket Number | No. 94-772,94-772 |
| Citation | 892 S.W.2d 271,319 Ark. 449 |
| Parties | Diarl NOLAND, Appellant, v. FARMERS INSURANCE COMPANY, INC., et al., Appellees. |
| Court | Arkansas Supreme Court |
John I. Purtle, Little Rock, for appellant.
Elizabeth Fletcher Rogers, Little Rock, for appellees.
On or about January 29, 1989, Diarl Noland and his wife, Debra Noland, purchased a homeowner's policy from appellee Farmers Insurance Co., Inc. The policy covered the Nolands' dwelling for a twelve-month period ending January 29, 1990. On the night of December 31, 1989, a fire destroyed the Noland house and its contents. As a result of the fire loss, Farmers paid the mortgagee, First Commercial Mortgage Company, the sum of $46,011.99 and under the terms of the policy, advanced the Nolands $2,000 for living expenses. Later, Farmers refused to make further payments under the policy because a question arose concerning whether the Nolands may have committed arson. Debra's cousin was also implicated. The Nolands subsequently were charged in federal court with conspiracy to commit arson and mail fraud, aiding and abetting arson and six counts of aiding and abetting in a mail fraud scheme. On December 17, 1990, Diarl Noland was found innocent, but his wife was convicted of the charges and is currently in prison.
On May 15, 1993, Noland filed a complaint against Farmers, seeking to collect under the homeowner policy as an innocent spouse. He also sought damages for the tort of bad faith. Farmers filed a counterclaim to Diarl Noland's suit and a third-party complaint against Debra Noland. Farmers asserted that the Nolands should reimburse Farmers the monies it had paid under the policy. The trial court granted Farmers's motion for summary judgment, holding that, under the terms of the policy, Diarl Noland could not recover as an innocent spouse. By its judgment, the court also dismissed Farmers' counterclaim and third-party suit against the Nolands. Diarl Noland appeals from that judgment.
Diarl Noland first argues that a homeowner's insurer should not be able to deny coverage benefits to an innocent spouse because of the wrongdoing of the other spouse. This court has never decided that exact issue. However, in Bryan v. Employers Nat'l Ins. Corp., 294 Ark. 219, 742 S.W.2d 557 (1988), the court did consider a similar question. There, a business partner was convicted of setting fire to the insured premises, and his co-partner brought suit against the insurer of the property in an attempt to recover proceeds for the fire loss under the policy. The trial court denied recovery under the policy terms, and concluded that, as a matter of law, the co-partner could not recover as an innocent partner. On appeal, this court affirmed, agreeing that the exclusionary provisions prohibited the innocent partner's recovery for the loss. Quoting the policy language, the Bryan court pointed out that the policy terms did not insure against a loss caused by any criminal act done by any insured or partner of any insured. The court determined that because the insured partner committed arson, the policy's explicit language precluded any recovery.
The court's decision in Bryan is in keeping with Arkansas law. This court has said that intent to exclude coverage in an insurance policy should be expressed in clear and unambiguous language, and an insurance policy, having been drafted by the insurer without consultation with the insured, is to be interpreted and construed liberally in favor of the insured and strictly against the insurer. Nationwide Mutual Ins. Co. v. Worthey, 314 Ark. 185, 861 S.W.2d 307 (1993). It is also a longstanding rule that, where the terms of the policy are clear and unambiguous, the policy language controls; and absent statutory strictures to the contrary, exclusionary clauses are generally enforced according to their terms. See State Farm Mutual Auto. Ins. Co. v. Cartmel, 250 Ark. 77, 463 S.W.2d 648 (1971). Like Bryan, a number of other jurisdictions have similarly held that, whether an innocent coinsured, regardless of the relationship, is able to recover under an insurance policy is dependent upon the language of the policy. See Spezialetti v. Pacific Employers Ins. Co., 759 F.2d 1139 (3rd Cir.1985) (); Vance v. Pekin Ins. Co., 457 N.W.2d 589 (Iowa 1990) (); ...
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